🔥 Kevin Warsh’s First Fed Meeting: A Hawkish Pivot Toward Rate Hikes 🤑

In Kevin Warsh’s debut as Fed Chairman, the Fed held its benchmark rate unchanged at 3.5%-3.75% in a unanimous vote.

But the accompanying projections told the real story: nine of 19 officials now see at least one rate hike this year, up from zero in March, while only one expects a cut, down from twelve.

Warsh struck a hawkish tone despite the political awkwardness, declaring “this committee will deliver price stability” and downplaying the hike forecasts as lacking strong conviction among his colleagues.

Markets reacted swiftly: Treasury yields jumped, the dollar rallied, and stocks fell, with traders now fully pricing in a rate hike by October.

The reversal reflects how dramatically the economic backdrop has shifted since the start of the year. Inflation forecasts for 2026 jumped sharply as core inflation projections rose to 3.3% from 2.7% in March, driven by the Iran war’s energy shock.

News of a preliminary U.S.-Iran peace deal has already pulled oil prices down, and if it holds, could ease some of the energy-driven inflation pressure weighing on the outlook.

🇺🇸 One Dot Missing from the Fed’s Famous ‘Dot Plot’ 🔴

The Fed’s dot plot, the quarterly chart where 19 policymakers anonymously plot their interest rate expectations, has been a cornerstone of how investors read the central bank’s intentions since 2011.

But at his first press conference as Fed Chairman, Kevin Warsh declined to submit his own forecast, calling the tool unhelpful for conducting policy.

He signaled that a broader review of Fed communications later this year could reshape or eliminate the dot plot, press conferences, and other guidance tools altogether.

Warsh has long been a critic of “forward guidance” generally, arguing the Fed should provide markets with less explicit signaling about future rate paths.

For investors, this matters because the dot plot has long served as one of the clearest windows into Fed thinking beyond the immediate rate decision.

Its potential phase-out introduces a new layer of uncertainty just as the committee is navigating one of its most consequential pivots in years, from rate cuts toward potential hikes.

If Warsh follows through on reshaping Fed communications, markets may need to rely more heavily on Fed officials’ public speeches and meeting minutes to gauge the path of rates, a shift that could increase volatility around Fed announcements in the months ahead.

💧BREAKING: Hormuz Closed, Iran Strikes Back Over US and Israel Violations 🚨

Iran's military has announced the closure of the Strait of Hormuz, citing US violations of the war-ending MOU and Israel's continued strikes in southern Lebanon.

🤡🤡🤡🤡 JD Vance on Iran:

I am very confident that we can maintain this ceasefire.

Source: Fox News

🚀 SpaceX has CRASHED over -30%
from its all-time high in just one week ↘️

The selloff has erased nearly -$1 TRILLION in market value, including -$250 BILLION today after shares tanked -16%...

Elon Musk's net worth has DECREASED by over
-$420 BILLION as $SPCX continues to decline from its all-time high 🔥🤯

🚨 BLOODBATH in Asian Markets 🌏

Over $800 BILLION wiped out from Asian stock markets in just a few hours amid a massive tech stocks sell-off.

South Korea's KOSPI down -8.2%, wiping out over ₩587,000,000,000,000 ($426 BILLION).

Japan's NIKKEI down 2.8%, wiping out approximately ¥32,500,000,000,000 ($217 BILLION).

TAIWAN's stock market down -3.5%, erasing NT$161,000,000,000,000 ($154 BILLION).

💵 The US dollar is getting stronger again 💪

The US dollar has climbed to its strongest level since November, with the Bloomberg Dollar Spot Index rising to a 7-month high.

That's cuz markets are starting to price in the possibility that the Fed may still need to hike rates again.

Traders now expect almost two 0.25% rate hikes by early 2027, while demand for options protecting against further dollar upside has hit the highest level in over a year.

This matters because a stronger dollar is not just a “currency thing”. It can hurt US companies that earn money overseas, because foreign revenue translates back into fewer US dollars. It can also pressure emerging markets, especially countries and companies that borrow in USD.

Simple takeaway:

A stronger dollar usually means financial conditions are tightening. So even if stocks are still near highs, the currency market is quietly saying: “don’t get too comfortable yet.”

Source: Hump Days / Bloomberg

🇺🇸 US stocks are near highs, but traders are buying protection 🛡

The S&P 500 has risen in 11 of the past 12 weeks and is now less than 2% away from its all-time high.

US equity funds also saw a record US$119 billion of inflows in just one week.

On the surface, this looks very bullish. But underneath, traders are starting to hedge.

The ratio of VIX call options to puts has climbed to the highest level this year. In simple terms, more traders are paying for protection in case volatility spikes. The concern is not that the market is weak today.

The concern is that valuations are stretched at the same time the macro backdrop is becoming less friendly. The AI rally has added roughly US$10 trillion in S&P 500 value since late March, pushing mega-cap tech valuations higher. That leaves less room for disappointment.

The next key test is the Fed’s preferred inflation measure, the PCE report. If inflation comes in hotter than expected, markets may need to reprice the “everything is fine” narrative.

When stocks are near highs and hedging demand is also rising, it usually means investors are still participating, but they are getting nervous, hence allocating into undervalued sectors might be an option worth considering..

Source: Hump Days / Bloomberg